Grand County and Moab city are considering creating a Community Reinvestment Area (CRA) as a way to help raise funds for the proposed Utah State University (USU)- Moab campus. CRAs are a political subdivision of the state that can capture tax growth in a given area to fund specific projects, local government officials said. Tax growth from property or sales and use taxes would be used to fund the USU-Moab campus or its infrastructure, officials said during a Jan. 17 meeting with city and county officials.
Grand County Council member Chris Baird, county liaison to the USU-Moab Advisory Board, said 100 percent of the tax growth “increments” in a defined area, or a certain percentage negotiated among the area’s taxing entities, could be used to fund the campus project.
“The main purpose that these [CRA’s] are instituted for is a funding mechanism for some type of project that the community is interested in,” Baird said. “And the way that that funding is usually produced is through tax increments, which means we define a geographic area which is related to the project. Within that area, as property values increase, the increase of that value and the taxes associated with it ... would go to that agency.”
Baird said, the growth in taxable values associated with the campus would actually pay for its development.
“As far as the government’s contribution to the campus going into the future, I think it’s a pretty good option because it uses the growth associated with the campus itself to pay for itself,” Baird said.
During the meeting, city and county council members participated in a straw poll, which showed unanimous support to continue exploring the CRA as a viable funding option. City council members Heila Ershadi and Tawny Knuteson-Boyd were not in attendance.
USU-Moab Dean Steve Hawks said the money raised through the CRA could go towards paying off the $727,000 loan Moab city obtained from the Utah Permanent Community Impact Fund Board (CIB) for the site’s infrastructure. Or, he said, it could fund future phases of campus construction.
“This money won’t come in time to create the first building, which we are going to find other ways to fund, but it could create the innovation center, the commercialization center, phase two of the campus, or something down the road that we would then have a funding stream to help support that,” Hawks said.
Hawks said creating a CRA is not unheard of for a USU campus. Brigham City also used this model, he said, to pay down a $7.5 million bond for its campus.
Cynthia Gibson, economic development liaison for USU-Moab, said USU-Brigham City really took off once its local leaders committed to establishing a CRA.
“This was the final piece of the funding puzzle for USU-Brigham City and once that happened, ground was broken and the campus was completed within a year,” Gibson said.
Baird said a community commitment like a CRA might also help motivate the Utah Legislature to commit funding towards a new USU campus in Moab.
“I think coming up with local funding sources is going to go a long way in terms of trying to convince the Legislature that they should also fund this,” Baird said.
He added that in order for the CRA to properly capture growth it needs to be in place as soon as possible.
“I think it’s fairly obvious that there’s a lot of interest in development down there around the campus site already,” Baird said. “ ... [A CRA’s] funding mechanism depends on getting the baseline established before the growth and the use value happens. If all the growth happens and then you create the [CRA] agency, you’re too late.”
Baird said creating a CRA would not affect the amount of taxes that property owners pay, only the amount collected by the taxing entities.
“The property owners themselves are going to end up paying the same amount in taxes regardless of whether it’s in place or not,” Baird said. “It doesn’t affect how much they pay, but it does cut into the taxing entities’ revenue.”
Baird said CRAs typically exist for “20 years or less,” after which all the captured growth reverts back to the taxing entities.
“At the end of the [CRA’s] life, when its purpose is complete, that growth and valuation would revert back to the taxing entities,” Baird said. “So whatever’s built as a result — the campus, all the economic development and increase in property values associated with it — eventually are all going to revert to the taxing entities at some point.”
That could be a selling point, he said, for taxing entities hesitant to give up their valuations for a certain period.
“In essence, each taxing entity would have to give up the growth that they would otherwise be able to gain,” Baird said. “But the selling point for me is that the university itself, especially in the area that [is] designated for this agency, is likely to become much more valuable if the university gets built versus if it doesn’t. So I think the net gain for a project like this, for anybody involved, would be there in the long run.”
Baird said creating a CRA agency would take a commitment of staff time and resources from Grand County and Moab city.
Amy Wiser, Moab City community development director, told the councils she has experience with these types of agencies, and would provide help with the process.
“I’ve been involved in two different urban renewal agencies in Oregon. I’ve been involved in the set-up and the running of one in the past,” Wiser said. “ ... There’s a lot to take into account but I’m certainly willing to help explore that.”